Alibaba is one of the top dogs at the beginning of 2023. Shares showed a more than 20% hike and brought back discussions about the Chinese stocks' future. So, let’s try to find out what’s been going on – is the Chinese market recovering, or was it just an opportunity to get some money out of investing in Alibaba we hope some of you seized?
Investors who have the shares in Chinese companies in their portfolios probably haven’t been too courageous in the last couple of years, as the market’s been as sad and hopeless as Radiohead’s discography.
Just look at the chart below – presenting several well-known Chinese companies listed on the American exchanges. These are Nio, Vipshop, Tencent Music Entertainment, Alibaba, Baidu and Tal.
And now let’s take a look at the chart for Alibaba. By the way, you can find any shares you need using Stock Screener, which will help you to make a list of papers sorted by configured criteria.
The most talked about moments for now, of course, are the beginning of the year and the skyrocketing upsurge that became possible due to a variety of factors.
The first and most important of them is the news coming from the Chinese central bank officials – the clampdown on the Chinese tech companies is drawing to an end. Moreover, the regulator is going to change its policy to support the growth of Internet service providers. It looks like it could be the end of the pressure era.
That’s not the only factor however, Alibaba has several others. When we say Alibaba, we mean retail – Taobao, Tmall, AliExpress, etc. So, easing the Covid-19 restrictions in China will most likely lead to stock price appreciation.
In addition, Ant Group – a fintech major and a subsidiary of Alibaba – has received permission from regulators to increase its registered capital by $1.5 billion.
Last but not least is the connection to Jack Ma. The legendary businessman and founder of Alibaba, who criticized the Chinese regulators' policy, agreed to ceding control of Ant Group. Some experts think that history will repeat itself and the relationship between Mr. Ma and Alibaba Group will revert to the point from which it started. We cannot be sure whether it’s good or bad for the company management, but it will likely be beneficial for its relationship with the regulators.
Despite the explosive increase seen at the beginning of 2023. Alibaba's stock is still considered underestimated. The consensus forecast made by the analysts is +27% by the end of the year.
Don’t forget – before making any decisions, you need to do your own research – especially when we are talking about the Chinese market where new policies introduced by regulators may surprise even the most vigilant traders.